AARP Sues U.S. Government over Reverse Mortgages
Thursday, March 10, 2011
With the help of the AARP, three senior citizens are suing the Department of Housing and Urban Development (HUD) over its change to the policy governing reverse mortgages.
Reverse mortgages allow older homeowners to borrow against the equity in their house. The amount paid out comes due when the homeowner dies or sells the home. From 1989 until 2008, holders of reverse mortgages never owed more than the home’s worth at the time of repayment. But then a new HUD policy required an heir or surviving spouse to pay the mortgage balance to keep the home, even if the loan balance was higher than the property’s value.
AARP lawyers argue that the new policy has pushed older homeowners into foreclosure. They also claim reverse mortgages were never intended to put seniors into the position of traditional mortgage holders, who often are liable for the difference between the value of their house after foreclosure and their original loan. But HUD’s policy change has done just that to older Americans, according to the seniors’ organization.
The plaintiffs, 79-year-old Delores Moore of Covington, Indiana, 77-year-old Leila Joseph of Brooklyn, New York, and 69-year-old Robert Bennett of Annapolis, Maryland, are all surviving spouses who are facing foreclosure.
-Noel Brinkerhoff, David Wallechinsky
AARP Sues U.S. Over Effects of Reverse Mortgages (by David Streitfeld, New York Times)
HUD Sued over Reverse-Mortgage Rules (by Amy Hoak, MarketWatch)
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